Global Markets Lower Due to North Korea Worries

Equity markets in Asia were broadly lower early Wednesday, as a risk-off mood prevailed due to heightened tensions on the Korean Peninsula.

Local drivers are likely to drive trading as U.S. markets were closed for the Fourth of July holiday. Other global catalysts are scarce.

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North Korea test fired what it claimed to be an intercontinental ballistic missile on the eve of Independence Day in the U.S. This has increased friction between Pyongyang and Washington, as the launch was seen as an escalation in the North's efforts to develop nuclear capabilities.

"Tensions will likely remain high in Asia," said Stuart Ive, a senior client manager at OM Financial in New Zealand. "We can expect some defensive trading as investors eye safety."

Japan's Nikkei Stock Average was down 0.6%, while Australia's ASX/S&P 200 was off 0.3% and South Korea's Kospi was flat.

Japanese stocks sold off as the yen rallied, sending exporter stocks lower. Since late Tuesday, the U.S. dollar has fallen about 0.2% against the yen.

Elsewhere, technology stocks remain in focus although performance was mixed across the region with some bargain hunting supporting individual companies. Chinese techn giant Tencent continued its trek lower in Hong Kong, down 0.6%, after narrowing a decline of as much as 3% earlier.

Despite the latest selloff, Tencent's shares are up 41% since the start of the year, adding to concerns that the stock looks expensive.

Analysts say a number sectors in the Chinese equity market, including the technology and consumer segments, look pricy.

"When you see the reserve tightening and a little bit less liquidity in the market, then you can be a little bit concerned about the sky high valuation of the market," said Frank Benzimra, head of Asia equity strategy at Société Générale.

The Shanghai Composite Index was recently down 0.2% and the Shenzhen Composite Index was off 0.1%.

In Japan, there was some relief for game maker Nintendo, which was up 1.1% after falling 5% on Monday. Sony Corp. was up 0.2% in early trading. Meanwhile, Samsung shares were 0.3% higher in Seoul.

In commodities, oil prices were stable as trading volumes remain light due to the U.S. holiday. However, a number of risk factors loom, with U.S. inventory data due out Wednesday.

The United Arab Emirates, Bahrain and Egypt want Qatar to give in to 13 demands that include closing down state broadcaster Al Jazeera, curbing ties with Iran and ending Turkey's military presence on its soil.